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Stocks dropped at Friday's open after the Trump administration said it will impose a 25% charge on up to $50 billion in Chinese goods.
The Dow Jones Industrials swooned 175.01 points to 25,000.30, with Caterpillar and Boeing as the worst-performing stocks in the index.
The S&P 500 lost 11.4 points to 2,771.09, as tech and industrials lagged.
The NASDAQ retreated 20.57 points to 7,740.47
In a statement Friday, President Donald Trump said the measures would affect Chinese goods "that contain industrially significant technologies," without specifying those products. He added that the action comes "in light of China's theft of intellectual property and technology and its other unfair trade practices."
Trump also said the U.S. would impose more tariffs on Chinese goods if China retaliates with duties of its own on American products.
China promptly responded to the Trump administration's announcement, with the Chinese Commerce Ministry saying it will implement tariffs on the same scale as the U.S.
Shares of Boeing and Caterpillar both dropped more than 1.5% following the news. The two stocks are highly sensitive to increasing trade tensions because a large chunk of their business comes from overseas.
Prices for the benchmark for the 10-year U.S. Treasury were higher, lowering yields to 2.90% from Thursday’s 2.94%. Treasury prices and yields move in opposite directions.
Oil prices recovered 31 cents to $66.95 U.S. a barrel.
Gold prices jumped $5.20 at $1,306.50 U.S. an ounce.
